Nvidia’s $40bn Takeover Of UK Chip Designer Arm Crumbled – Cryptovibes.com – Daily Cryptocurrency and FX News
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After Japan’s SoftBank abandons sale, British firm aims to seek stock market flotation
Due to insurmountable regulatory hurdles, Nvidia’s $40bn (£29.6bn) takeover of the Cambridge-based Arm collapsed, leaving the British chip designer to seek a stock market flotation in the coming months as a funding alternative.
Since it was announced in September 2021, it would have been the largest in the semiconductor industry. But, it did face fierce opposition from players within the industry and was mired in red tape on both sides of the Atlantic and in China.
The Arm – which has more than 500 clients that use its chip designs, including Apple, Samsung, and Google, in products ranging from iPads and mobile phones to cars and smart TVs – was acquired by Japan’s Softbank for $32bn in 2016.
The deal was terminated due to “significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties”, Softbank and Nvidia explained their decision in a joint statement.
Since Nvidia’s share price has soared, the cash and stock deal has dramatically increased in value to as much as $75bn, from about $40bn when it was announced 18 months ago.
Softbank moved to announce that it plans to revert to its backup plan of an initial public offering (IPO) to cash in on Arm and will receive a $1.25bn break-up free from Nvidia. A management shake-up was also announced by the chip designer, which employs 6,500 staff including 3,000 in the UK.
The chief executive, Simon Segars, was replaced by Rene Haas, Arm’s head of intellectual property unit who previously worked at Nvidia for seven years, to lead the publicly listed company. SoftBank chief executive, Masayoshi Son, said in the statement provided by Arm:
“Rene is the right leader to accelerate Arm’s growth as the company looks to re-enter the public markets. We will take this opportunity and start preparing to take Arm public, and to make even further progress.”
Due to Arm’s strategic importance in the global chip industry, Nvidia said that it would remain a close partner despite the failed takeover. Jensen Huang, the founder and chief executive of the California-based Nvidia, stated:
“Arm is at the center of the important dynamics in computing. I expect Arm to be the most important [computer processing unit] architecture of the next decade.”
In December, legal action was launched by the US Federal Trade Commission to block what it called an “illegal vertical merger” that would give Nvidia too much market power, having dealt a hammer blow to the prospect of a successful takeover.
Citing competition and national security concerns, the UK ordered an in-depth investigation into the deal last year, while the EU and China had also raised serious concerns.
Before the end of the financial year to 31 March 2023, SoftBank said on Tuesday that Arm would prepare for a stock market flotation. Even though no decision has been made on where to list the company, it is understood that the United States is favored as it generally results in higher valuations for technology stocks.
With the US Company able to control the technology and licensing of chip designs to rival countries, many of Arm’s extensive client base said that a takeover by Nvidia would end its status as the Switzerland of the semiconductor industry.
After failing to secure approval in China, being a victim of a trade dispute between Beijing and Washington, the US Company Qualcomm abandoned its $44bn, the two-year pursuit of the Dutch chipmaker NXP in 2018.
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